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Title Corporate social responsibility disclosures in internationalconstruction business: trends and prospects
Author(s) Lu, W; Ye, M; Flanagan, R; Ye, K
Citation Journal of Construction Engineering and Management, 2015
Issued Date 2015
URL http://hdl.handle.net/10722/214522
Rights
Journal of Construction Engineering and Management.Copyright © American Society of Civil Engineers.; This work islicensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
1
Corporate social responsibility disclosures in international construction business: 1
trends and prospects 2
Weisheng Lu1, Meng Ye2, Roger Flanagan3, and Kunhui Ye4 3
4
Abstract 5
There is increasing sophistication in corporate social responsibility (CSR) disclosures by 6
international construction companies (ICCs). Nevertheless, a systematic analysis of the trends 7
and prospects is yet to appear. This study fills that knowledge gap by providing an understanding 8
of the idiosyncrasies of CSR disclosure and by offering suggestions for future reporting exercises. 9
By examining the top fifty ICCs’ CSR/sustainability reports using content analysis, it found that 10
the more negative impacts a company may have, the more remedial strategies it will disclose in 11
a CSR report. ICCs from economically more developed countries maintain a high level of CSR 12
disclosure, while their counterparts from developing countries have caught up in this CSR cause. 13
As a way to improve the consistency and integrity of disclosed information, ICCs are 14
increasingly adopting CSR reporting guidance frameworks and using third-party assurances. 15
CSR disclosures present a high degree of uniformity while they also show nuanced and intriguing 16
diversity. This research helps understand comprehensively the trends of CSR disclosure in 17
international construction. It will help ICCs extrapolate their future CSR reporting exercises. 18
19
Keywords: Corporate social responsibility; Disclosure; International construction business; 20
Trends; Prospects; Content analysis 21
22
Introduction 23
Probably no industry offers as many paradoxes as construction corporate social responsibility 24
(CSR). On the one hand, the construction industry has an inherent social responsibility; it 25
materializes the built environment, which influences human health, economic activities, social 26
behavior as well as cultural identity and civic pride (Pearce 2003). The industry makes an 27
important contribution to the national economy, and provides a large number of jobs. It is a 28
hugely important industry in scope and scale; Flanagan and Jewell (2014) estimate global 29
1 Assistant Professor, Dept. of Real Estate and Construction, Faculty of Architecture, The University of Hong Kong,
Pokfulam, Hong Kong. Corresponding Author. Email: [email protected] 2 PhD candidate, Dept. of Real Estate and Construction, Faculty of Architecture, The University of Hong Kong,
Pokfulam, Hong Kong 3 Professor, School of Construction Management and Economics, The University of Reading, Reading, UK 4 Professor, Faculty of Construction Management and Real Estate, Chongqing University, Chongqing, China.
2
construction output of US$6.8 trillion in 2013, which contributes between 8-10% to the annual 30
global gross domestic product. The industry provides employment for a substantial number of 31
the working population, e.g. around 30 million people in China are employed in construction 32
activities (National Bureau of Statistics of China 2014), 7.2 million in the USA (US Bureau of 33
Labor Statistics 2014), and 11 million in the European Union (EU Construction Statistics 2014). 34
On the other hand, construction is intrinsically ‘irresponsible’; it competes with the natural 35
environment and can have an adverse impact upon it, including land degradation, resource 36
depletion, waste generation, and various forms of pollution (Lu and Tam 2013; Zhao et al. 2012; 37
Ofori 1993). Buildings are responsible for more than 40 percent of global energy use and one 38
third of global greenhouse gas emissions (Rode et al. 2011). Corrupt practices are also an issue 39
with Transparency International suggesting that construction is one of the top three most corrupt 40
industries in the world. Competition in the construction industry is notoriously fierce. To survive, 41
companies sometimes operate at the expense of societal well-being; producing unsatisfactory 42
work, offering a harsh working environment, and maintaining poor occupational health and 43
safety standards. The conjunction of these paradoxes has brought CSR to the fore; it is now 44
growing in prominence as a core issue confronting the construction industry and its organizations 45
(Murray et al. 2008). 46
47
The above paradoxes relating to construction CSR are evident on an international scale. In recent 48
years, advanced technology, fast transportation, convenient communications, effective 49
knowledge transfer, integrated markets, and trade liberalization have all helped the construction 50
business traverse traditional national boundaries into the international arena (Lu et al. 2013). This 51
has formed a new business sector known as international construction, which is defined as the 52
part of construction business that is undertaken by companies working on projects outside their 53
home country (Ngowi et al. 2005). As an example of the scale of this business, Engineering 54
News-Record (ENR) statistics show that the ENR Top 250 International Contractors had 55
US$511.05 billion in contracting revenue in 2012 from projects outside their home countries, 56
along with US$813.55 billion in revenue from domestic projects (Tulacz 2013). With the 57
increasing globalization of construction business, the social responsibility of international 58
construction companies (ICCs) extends beyond their home country. For example, ICCs 59
undertaking construction business in a host country may also help build a hospital or school for 60
the benefit of the local community. The international construction business is a positive 61
development in terms of value creation, knowledge exchange, and resource configuration and 62
3
optimization. However, it is also criticized as being relatively irresponsible, given the embodied 63
energy and the carbon emissions associated with mobilizing resources across continents. CSR 64
has immediate material relevance for ICCs in their head and regional offices, at site locations 65
and through extensive supply chains. They increasingly face the effects of extreme poverty, 66
unacceptable working conditions, environmental degradation, systemic corruption or eruptions 67
of violence. In this environment, companies can choose one of two routes: uphold high standards, 68
or try to ignore the situation. Major ICCs will always take the former route. 69
70
A conspicuous trend in recent years is that ICCs, similar to companies in other business sectors 71
(e.g. mining, food, and investment), have published CSR disclosure reports to communicate their 72
CSR commitment and achievements to stakeholders. Unlike other businesses however, an 73
extensive literature review showed that, despite of CSR issues having been discussed in the 74
construction industry (e.g. Petrovic-Lazarevic 2008; Murray and Dainty 2008; Griffith 2011; 75
Bowen et al. 2007; Fox 2000; Liu et al. 2004; and Hill and Bowen 1997), no study has been 76
conducted to analyze ICCs’ reporting practices systematically. Jenkins and Yakovleva (2006) 77
explored the trends of CSR disclosures in the mining industry using a case study of the world’s 78
10 largest mining companies. Waller and Lanis (2009) analyzed CSR disclosure patterns in the 79
advertising sector, while Cuganesan et al. (2010) examined CSR disclosures within the 80
Australian food and beverage industry. Jones et al. (2010) investigated corporate approaches to 81
sustainability in the US engineering and construction industry. As elaborated later, sustainability 82
is not quite equal to CSR, although companies at times perceive them as similar. Zhao et al. 83
(2012) provided a set of indicators that can be used to implement CSR in the construction 84
industry and help companies methodically assess their CSR performance. There are pressures on 85
all companies to improve CSR reporting. For example, the Global Reporting Initiative (GRI) sets 86
out minimum requirements in key areas of CSR and companies sign up to report in accordance 87
with the requirements. The ISO26000 defines good practice and establishes standards. There is 88
legislation to ensure corruption does not occur, such as the UK Bribery Act 2010 and the US 89
Foreign Corrupt Practices Act 2004 and the US Anti-Corruption Act, and there are voluntary 90
codes on ethical behavior. However, the trends and prospects of CSR disclosures have not been 91
adequately articulated, despite the relevance of the two issues to an understanding of how CSR 92
is actually interpreted, practiced, and reported in international construction. 93
94
4
The aim of the study was to explore the trends and prospects in CSR reporting conducted by 95
ICCs. The research is of significant academic and practical value. Firstly, the trends can reveal 96
how the concept of CSR has been interpreted and practiced by ICCs. Jenkins and Yakovleva 97
(2006) noticed that companies show considerable variations in the maturity of the content and 98
style of their CSR reporting. The research will provide an ‘epistemological link’ (Zhao et al. 99
2012) between the concept of CSR and the real CSR strategies implemented by ICCs. Secondly, 100
exploring the trends of CSR disclosure will help reveal how CSR reporting is standardized. Zhao 101
et al. (2012, p. 279) discovered that there is little uniformity in CSR indicator frameworks, as 102
“these initiatives have evolved in a manner specific to the needs of the jurisdiction at that time 103
and place”. Standardization of CSR reporting is advocated as an effective way of communicating 104
CSR strategies and performance to stakeholders, and efforts to increase uniformity are evident 105
in various international standards in this area, e.g. ISO 26000 and Social Accountability 8000. 106
Thirdly, the trends to be identified provide useful references against which the idiosyncrasies of 107
CSR disclosures in the international construction business and other sectors can be compared. 108
This study is contextualized within international construction not only because it is an important 109
business sector received scant attention from researchers, but also because it provides a 110
contrasting lens through which CSR can be fruitfully investigated. Lastly, examining the 111
prospects of CSR disclosure will help ICCs extrapolate their future CSR reporting exercises. 112
Companies spend important resources on producing CSR reports; the research will help them to 113
use the resources more wisely and effectively in disclosing their CSR excellence. 114
115
The remainder of this paper is structured into four sections. Subsequent to this introductory 116
section, the theoretical foundation of this study and research hypotheses are elaborated in Section 117
2. Section 3 provides a detailed description of the research methods, whereby content analysis 118
of the CSR reports disclosed by ICCs is adopted. The fourth section presents the results, 119
discussion, and findings. Section 5 provides conclusions and limitation, and implications for 120
further research. 121
122
Theoretical foundation and research questions 123
Corporate Social Responsibility (CSR) disclosure is seen as “the process of providing 124
information designed to discharge social accountability. Typically this act would … be 125
undertaken by the accountable organization and thus might include information in the annual 126
report, special publications or even socially oriented advertising” (Gray et al. 1987, p. 4). The 127
5
most widely embraced theoretical perspectives explaining motivations for CSR reporting are 128
legitimacy theory and stakeholder theory. According to Waller and Lanis (2009), CSR disclosure 129
is a means of legitimization. Companies do not operate in a vacuum; rather, they impact and are 130
impacted upon by the socio-political context and the stakeholders. Here, stakeholders are any 131
individual, group, organization, member or system that affects or can be affected by an 132
organization’s actions (Freeman 1983). Stakeholder theory holds that stakeholders have different 133
interests in, and thus have different impacts on a corporation, either positive or negative, and the 134
corporation is seen to be responsible for meeting their interests even though they are outside of 135
the corporation (Freeman 1983). There is a ‘social contract’ between a company and society 136
formed by various stakeholders (Deegan 2002; Mathews 1993; Patten 1992). Bound by this 137
contract, firms agree to perform various socially desired actions in return for societal approval 138
of their objectives and other rewards, and this ultimately guarantees their continued existence 139
(Deegan 2002; Brown and Deegan 1998; Guthrie and Parker 1989). In this sense, CSR disclosure 140
is a method by which management can interact with society to influence society’s perceptions of 141
their organization (Deegan 2002), and discharge their obligations (Farook et al. 2011; Campbell 142
2000). In addition to achieving legitimacy, there are other motivations for a company to engage 143
in CSR disclosure. They are: (1) enhancing corporate reputation and brand value; (2) gaining a 144
competitive advantage; (3) signaling superior competitiveness; (4) allowing comparison with 145
and benchmarking against competitors; (5) increasing transparency and accountability within the 146
company; and (6) establishing and supporting employee motivation as well as internal 147
information and control processes (Herzig and Schaltegger 2006). To this can be added the 148
opportunity to attract new customers, to attract new investors, to increase trust, to influence 149
government policy makers, and to establish a reputation of being a socially responsible company. 150
151
Nevertheless, there is little consensus on what should be included in CSR disclosures. The terms 152
of the ‘social contract’, or what CSR entails, cannot be known with any precision (Farook et al. 153
2011). This is further exacerbated by the confusion caused by terminology in CSR. Dahlsrud 154
(2008) identified 37 definitions of CSR and found that the existing definitions are to a large 155
degree congruent, but Carroll and Shabana (2010), contended that this figure is an 156
underestimation, as many academically derived definitional constructs were not included in 157
Dahlsrud’s research. The UN Global Compact (2013) suggests the terms ‘corporate sustainability’ 158
and ‘corporate responsibility’ are interchangeable; whereas the term ‘corporate social 159
responsibility’ is used to reflect an organization's recognition of its social responsibility. Lu et al. 160
6
(2014) reported that there is no single, agreed definition of the term CSR. This has resulted in a 161
diversity of CSR strategies and reporting amongst companies. Managers have different 162
perceptions about these terms, and their CSR disclosures will vary (Waller and Lanis 2009). 163
164
Cuganesan et al. (2010) pointed out that one issue of increasing importance is the need to 165
recognize industry specificity when formulating and assessing CSR disclosure. This is in line 166
with Windsor (2001), which argued that how CSR is understood and perceived still largely 167
depends on the business context and the managerial dispositions of each corporation. This also 168
resonates with studies that have identified the nature of a company’s industry as a factor affecting 169
CSR disclosure (e.g. Cho and Patten 2007; Yongvanich and Guthrie 2005; Halme and Huse 1997; 170
Roberts 1992). “Industries exhibit special uniqueness in that the internal competencies or 171
external pressures inherent in the industry create a ‘specialization’ of social interests” (Griffin 172
and Mahon 1997, p. 10). It is to be expected that the heterogeneities of the international 173
construction business, the aforementioned paradoxes in particular, will lead to idiosyncrasies in 174
CSR reporting. 175
176
According to one theoretical perspective, higher levels of CSR disclosure occur concurrently 177
with increased focus on the problems a company may cause, or the threats of litigation and fines 178
it may face (Cho and Patten 2007; Yongvanich and Guthrie 2005). In other words, the more 179
‘irresponsible’ impacts a company may have, the more remedial strategies it will disclose in a 180
CSR report. It has been well articulated that international construction witnesses many CSR 181
paradoxes, e.g. it providing the built environment by competing against the natural environment, 182
and it causing many nuisance to the community. An immediate relevant research question is “Do 183
ICCs disclose more about their commitment to CSR remedial strategies such as energy saving, 184
carbon emission reduction, community care, transparency, occupational health and safety 185
(OHS), logistic and supply chain management, transparency, and anti-competitive behavior 186
(Q1)?”Answering this research question is of both theoretical and practical significance. It 187
enables confirmation whether legitimacy theory and stakeholder theory can be applied to explain 188
the motivation for CSR disclosure and reveal the issues that should be entailed in the ‘social 189
contract’. 190
191
In view of growing global concerns over CSR, it is with no doubt that ICCs will increase their 192
CSR disclosure level, which reflects the extent to which ICCs have reported their CSR strategies 193
7
and consequently, the performance achieved. Previous studies (e.g. Kolk et al. 2001; Maignan 194
and Ralston 2002) have suggested that there are country-specific and industry-specific 195
differences in the extent of CSR reporting. The industry-specific differences and their impact on 196
CSR disclosures, as described above, are to be examined by linking them to the heterogeneities 197
of international construction, in particular the CSR paradoxes. Given that companies in 198
developed countries have been striving for some time to meet escalating legal requirements, there 199
is a view that developing countries have more potential in terms of introducing CSR strategies 200
(Lu et al. 2014). The contemporary CSR movement is primarily pushed by the civil society in 201
more economically developed countries, but the movement has great impact on less developed 202
countries in the age of globalization. It is thus posited that ICCs from more economically 203
developed countries will maintain a high level of CSR disclosure, while their counterparts from 204
less developed countries will try to improve their CSR disclosure levels. An immediate research 205
question is “Do ICCs from more economically developed countries maintain a higher level of 206
CSR disclosure than their counterparts from less developed countries? (Q2)” 207
208
In parallel with these differing reporting levels, there has been found no uniformity in method of 209
CSR reporting. International organizations such as the ISO, the World Resources Institute and 210
the GRI have therefore started developing frameworks to standardize CSR reporting. The move 211
towards standardization represents not only a convergence in the language and transparency of 212
CSR, but also convergence of CSR into an agreed concept and a credible form of self-regulatory 213
governance over issues that are not externally regulated (Chiu 2010). The GRI, for example, aims 214
to develop a voluntary reporting framework that will elevate sustainability reporting practices to 215
a level equivalent to that of financial reporting in rigor, comparability, auditability and general 216
acceptance (Willis 2003). It has recently published the Construction & Real Estate Sector 217
Supplement (CRESS) with the aim of providing sustainability performance indicators and 218
disclosures that are important or unique to the sector. This research is conducted at an opportune 219
time, as it is straddling a period that is before and after the publication of an international 220
construction relevant CSR reporting guidance, i.e., CRESS. It would be interesting to find out 221
“Are there more ICCs reporting their CSR performance in accordance with the GRI reporting 222
guidelines and using more third-party assurance to enhance the credibility of the disclosed 223
information? (Q3)” 224
225
8
Standardization unnecessarily means no nuanced and intriguing diversity allowed in CSR 226
reporting undertaken by ICCs. The ‘social contract’ between a corporation and society, which in 227
turn influences CSR disclosures, depends not only on industry specificity, but also on countries. 228
Other than categorizing countries into developed and developing countries in Q2, it needs to 229
further examine countries with different cultures and institutions. The international construction 230
business is subject to many onerous regulatory and cultural differences, such as controls on land 231
use; building regulations and technical requirements; building permits and inspection, and 232
environmental regulations. In face of the culture (Kogut and Singh 1988; Tijhuis and Fellows 233
2011) or institutional distance (Bae and Salomon 2010; Lu et al. 2013) between the home and 234
host countries, ICCs would not be able to adopt ‘one-size-fit-all’ CSR strategies. For example, 235
the culture distance or institutional distance may bring tension and force ICCs to deliberate CSR 236
strategies in host countries, e.g. to reduce poverty, or to improve community health. The cultural 237
characteristics of a home country may lead to interesting nuanced difference in CSR disclosures 238
although standardization is advocated. A natural thinking is that they may tailor their CSR 239
strategies with respect to the cultural or institutional profile of host countries. It is thus interesting 240
to find out “What are the idiosyncrasies in CSR reporting impacted by cultural or institutional 241
difference? (Q4)” 242
243
It is expected that, by examining the above four research questions retrospectively, the prospects 244
of CSR disclosures by ICCs can be regressed. To understand the trends of CSR disclosure as 245
stated in CSR reports is important, while the more meaningful research inquiry is to considering 246
their impact on the future, although it is often risk-prone to extrapolate into the future. To 247
maintain the consistency of presentation, the sixth research question is proposed: “What are the 248
possible prospects of CSR disclosures by ICCs? (Q5)”. 249
250
Research methods 251
The sample of international construction companies (ICCs) was determined by reference to the 252
top international contractors (TIC) lists compiled by Engineering News-Record (ENR), an US-253
based construction, building and engineering-oriented magazine. Since the late 1970s, ENR has 254
ranked the 225 (250 in recent years) largest ICCs based on general construction contracting 255
revenues generated from projects outside each firm's respective home country. The top 50 on the 256
2013 ENR TIC list were selected as the sample (See Table 1). Among the sample ICCs, twenty-257
one companies are from Europe, twenty from Asia and Australia, eight from the USA, and one 258
9
from Brazil. It might not be entirely valid to identify the ‘nationality’ of a company, owing to 259
frequent mergers and acquisitions across country borders in the international construction 260
business. For example, the No. 1 company by the name of ‘Grupo ACS’ in Spain is the majority 261
shareholder in the second highest company named ‘Hochtief AG’ from Germany; and meanwhile 262
these two companies are the principal shareholders of ‘Leighton Holding’ from Australia. 263
Nationalities are thus better seen as the ‘national origins’ of a company. The ICCs’ main line of 264
business is based on ENR 2013 (Tulacz 2013), which states that a business taking up 20% or 265
above of the company’s total revenue is deemed to be the company’s main line of business. 266
267
Table 1. Profiles of the top 50 international construction companies in the selected sample 268
Rank* Name National
origin
Main
business
lines#
Rank* Name National
origin
Main
business
lines#
1 Grupo ACS Spain GB, TA 26 Daelim S. Korea IP
2 Hochtief Germany GB, TA 27 Salini Italy TA, WS
3 Bechtel USA IP, TA 28 GS E&C S. Korea IP
4 Vinci France TA 29 KBR USA TA
5 Flour USA IP 30 Abeinsa Spain PO
6 Strabag Austria TA 31 Leighton Australia GB, IP,
TA
7 Bouygues France TA 32 JGC Japan IP
8 Saipem Italy IP 33 Lend Lease Australia GB
9 Skanska Sweden GB, TA 34 CREC China TA, GB
10 CCCC China TA 35 SK E&C S. Korea IP
11 Technip France IP 36 Samsung C&T S. Korea PO
12 Odebrecht
Organization
Brazil TA, IP 37 CB&I U.S.A. IP
13 Samsung
Engineering
S. Korea IP 38 Tecnicas Reunidas Spain IP
14 FCC Spain GB, TA 39 Kiewit U.S.A. IP, PO
15 Hyundai
E&C
S. Korea PO, IP 40 Daewoo E&C S. Korea IP, PO
16 Bilfinger Germany IP 41 Danieli & C Italy IP
17 Balfour
Beatty
UK GB, TA 42 McDermott U.S.A. IP
18 Petrofac UK IP 43 CITIC China GB
19 Royal BAM The
Netherlands
GB, TA 44 Foster Wheeler U.S.A. IP, PO
20 Sinohydro China PO, TA 45 Isolux Corsan Spain PO, TA
21 CCG Greece IP, TA 46 POSCO S. Korea IP, PO
22 PCL USA GB, IP 47 Obayashi Japan GB, TA
23 OHL Spain TA 48 Larsen India IP, PO
24 CSCEC China GB, TA 49 Acciona Spain TA, GB
10
25 China
Machinery
China PO, IP 50 Kajima Japan GB, MA
* The ranks are based on the year 2013. 269
# GB=General Building; MA=Manufacturing; PO=Power; WS=Water Supply; SW=Sewer/Waste; 270
IP=Industrial/Petroleum; TA=Transportation; HW=Hazardous Waste; and TE=Telecom. 271
272
CSR reports of the sample ICCs over the past five years (2008–2012) were retrieved from their 273
websites. The TIC 50 is not a static group; they will change each year on the list dependent upon 274
performance; some firms even drop off the lists in certain years. It is common practice for ICCs 275
to communicate their CSR strategy and performance through the Internet as a major channel with 276
some having developed a themed website for this purpose. Companies published either 277
sustainable development/sustainability reports or CSR reports, which is not particularly 278
unexpected given that there is no clear boundary between the two concepts (Ebner and 279
Baumgartner 2006). Two ICCs named ‘JGC’ and ‘SK E&C’ publish environment reports to 280
show their CSR performances with regard to the environment. A total of 155 CSR/sustainability 281
reports were collected for analysis, putting aside the question of whether the two concepts are 282
one and the same. 283
284
The CSR/sustainability reports were coded using content analysis; an approach adopted by many 285
researchers to analyze CSR reporting (e.g. Roca and Searcy 2012; Jenkins and Yakovleva 2006; 286
Wilmshurst and Frost 2000). Content analysis is a systematic, replicable technique for 287
compressing many words of text into fewer content categories based on explicit rules of coding 288
(Krippendorff 2012; Stemler 2001). It is a continuous and iterative process characterized by two 289
key stages, the first of which requires managing the data, and the second stage involving making 290
sense of the evidence through descriptive or explanatory accounts (Burden and Roodt 2007). 291
292
An instrument as shown in Table 2 has been developed as the protocol for decoding CSR reports. 293
The instrument includes indicators, which are not specifically included in the CRESS G3.1 but 294
are frequently mentioned in reports, such as Information Transparency (IT). There are six groups 295
with 23 sub-categories of performance indicators in total listed in Table 2: (1) EN- Environment 296
(5 sub-categories); (2) SO- Society (4 sub-categories); (3) LA- Labor Practices and Human 297
Rights (6 sub-categories); (4) PR- Product Responsibility (2 sub-categories); (5) IT- Information 298
Transparency (3 sub-categories); and (6) EI- Economic Indicators (3 sub-categories). 299
300
301
11
Table 2. The protocol for decoding CSR reports 302
Codes Categories Codes Sub-categories Stakeholders related
EN Environment EN1 Materials The Public
EN2 Energy The Public
EN3 Water The Public
EN4 Biodiversity The Public
EN5 Emissions, effluents and waste The Public
SO Society SO1 Community Local Communities
SO2 Code of Conduct/ Ethic Local Communities
SO3 Anti-Corruption Local Communities
SO4 Anti-Competitive Behavior Competitors
LA Labor Practices and
Human Rights LA1
Diversity and Equal
Opportunity Employees
LA2 Training and Education Employees
LA3 Occupational Health and Safety Employees
LA4* Work- Life balance Employees
LA5* Salary policy/ Benefits Employees
LA6* Employee Feedback Employees
PR Product Responsibility PR1
Customer Health and Safety
/Quality
Clients and future
users
PR2 Product and Service Labeling Clients and future
users
IT* Information
Transparency IT1* Media The Public
IT2* Intra-corporate Employees
IT3* Reported to markets Shareholders
EI Economic Indicators EI1 Economic performance Shareholders
EI2 Market presence Suppliers and Local
Communities
EI3 Indirect economic impacts Local Communities
*Aspects summarized from the corporate reports 303
304
The 23 CSR performance indicators in each of the 155 SD/CSR reports were manually coded 305
into a MS Excel file. If a report disclosed a certain indicator, it was noted with a “√” in the Excel 306
file; otherwise, the indicator was marked with a “-“. This laborious coding process produced a 307
very large table (called Table A), a part of which is shown in Table 3. The table describes the 308
CSR performance reported by ICCs over the past five years. The process was also with the 309
assistance of qualitative data analysis software “Leximancer” that automatically identified high 310
level concepts in the documents. To reduce the inherent subjectivity and potential variance, a 311
second coder repeated the process independently and produced another table (called Table B). 312
To ensure the consistency of the works from the two independent coders, Cohen's Kappa 313
coefficient could have been applied, but a more straightforward method was adopted. The two 314
excel tables, having an identical structure, were subtracted from each other, i.e. Table A-Table 315
12
B. Those cells/indicators scoring a result other than “0” meant an inconsistency between the two 316
coders. The reports were then analyzed again to determine whether the indicator in question had 317
in fact been reported. This process was repeated until all the cells scored a “0”, meaning that full 318
agreement between the two coders had been achieved. The finalized Excel table, formed an 319
information hub for data analyses. 320
321
13
Table 3. An excerpt of the data table generated from the content analyses of the CSR reports 322
323
324
Typles of Report EN1 EN2 EN3 EN4 EN5 SO1 SO2 SO3 SO4
Ranking Name Country Materials Energy Water Biodiversity
Emissions,
effluents and
waste
Community
Code of
Conduct/
ethic
Anti-
Corruptio
n
Anti-
Competitive
Behaviour
2008Corporate Respons ibi l i ty/ Annual
Report√ √ √ √ √ √ √ — —
2009Corporate Respons ibi l i ty/ Annual
Report√ √ √ √ √ √ √ — —
2010Corporate Respons ibi l i ty/ Annual
Report√ √ √ √ √ √ √ — —
2011Corporate Respons ibi l i ty/ Annual
Report√ √ √ √ √ √ √ — —
2012Corporate Respons ibi l i ty/ Annual
Report√ √ √ √ √ √ √ √ √
2009 Sustainability Report √ √ √ √ √ √ √ √ —
2011 Sustainability Report √ √ √ √ √ √ √ √ —
2012 Sustainability Report √ √ √ √ √ √ √ √ √
2008 The Bechtel Report √ — — — √ — — — —
2009 The Bechtel Report — — — — √ — — — —
2010 The Bechtel Report — — — — — √ √ — —
2011 The Bechtel Report √ √ — — √ √ √ — —
2012 The Bechtel Report √ √ — — √ √ √ — —
2008 Annual Report — — — — √ √ — — —
2009 Annual Report — √ √ √ √ √ √ — —
2010 Annual Report — √ — √ √ √ √ — —
2011 Annual Report — √ — √ √ √ √ — —
2012 Annual Report — — — √ √ √ √ — —
3 Bechtel San Francisco,U.S.A.
4 VinciRueil-
Malmaison,France
1 Grupo ACS Madrid, Spain
2HOCHTIEF AG (Hochtief
Aktiengesellschaft )Essen, Germany
Company
Years
EN-Environmental Performance Indicators SO-Society
14
Based on the analyses of the quantitative data in the table, CSR reports were used as qualitative 325
data to deepen the understanding of CSR strategies and their performance reported by the ICCs. 326
The authors have conducted a few informal discussions with executives of top ICCs different 327
occasions over the past years to solicit their insights on CSR. This was used as qualitative data 328
to be triangulated with the quantitative and qualitative data decoded from the CSR reports. The 329
data will be analyzed and blended together in this paper to ensure an uninterrupted reading 330
journey in understanding the trends and prospects of CSR disclosures by ICCs. 331
332
Results, analysis and discussion 333
Profile disclosure 334
Table 4 shows that CSR disclosure reports have a diverse range of titles. They may be referred 335
to as CSR reports (e.g. CCCC), corporate responsibility reports (e.g. Grupo ACS), sustainability 336
reports (e.g. Fluor Corporation), environment reports (e.g. JGC), annual reports (e.g. Vinci), or 337
named after the company name (e.g. the Bechtel reports). Some of the ICCs (e.g. Skanska AB) 338
published part of their annual report on their CSR/sustainability disclosure website. The diversity 339
of these titles reflects the absence of a single and agreed definition of the term CSR (Carroll and 340
Shabana 2010), and the blurred boundary between sustainability and CSR (Ebner and 341
Baumgartner 2006). It was ascertained that all of them do disclose CSR/sustainability strategies 342
and performance, and can thus be treated as a homogeneous group. 343
344
Table 4. Types of reports used by ICCs for CSR disclosure 345
Years
Types of Reports Total reports
(?/50) CSR
reports
Sustainability
reports
Environment
reports
Annual
reports
Incomplete
report/
website
2008 6 9 0 4 1 20
2009 7 12 2 3 1 25
2010 6 16 2 5 1 30
2011 8 15 2 6 2 33
2012 9 19 2 7 10 47
346
The last column of Table 4 shows that the total number of CSR reports disclosed by ICCs has 347
increased over the period, i.e. five years from 2008 to 2012 inclusive. In 2012, 47 out of the 50 348
sample ICCs published a CSR report or its equivalent. CSR reporting, while not mandatory in 349
most countries, has been adopted by many large ICCs around the world. This trend may reflect 350
15
on one hand stakeholders’ increasing influence on the operation of corporations and, on the other 351
hand corporations are becoming more willing to use CSR disclosure as a means of interacting 352
with society. 353
354
Q1: Do ICCs disclose more about their commitment to CSR remedial strategies? 355
Based on the basic data in Table 3, specific types of CSR strategy and performance disclosure 356
were analyzed. This involved counting each “√” of a specific indicator as 1 point across all the 357
sample reports, and plotting the total points in the spider diagram as shown in Fig. 1. The total 358
points of a specific indicator reflect the number of companies that have reported the indicator in 359
a given year. The diagram shows that EN5 (Emissions, effluents and waste), SO1 (Community), 360
and LA3 (Occupational Health and Safety) are the three most frequently reported CSR indicators. 361
All the reports in 2011(33/33) and 2012(47/47) included these three indicators, and in the years 362
from 2008 to 2010, over 90% of the companies elaborated these three strategies in their reports. 363
The analytical results support the assumption that the more negative impacts a company may 364
cause, the more remedial strategies it will disclose in a CSR report. The indicators with a long 365
axis in the spider diagram are all problematic aspects that ICCs can improve upon for the benefit 366
of society, or their legitimacy of existence as a company will be challenged. The CSR reports 367
have frequently mentioned their commitment to stakeholders such as employees, clients and 368
future users, shareholders, suppliers, and particularly, local community and the general public 369
(Table 2), even though the latter are outside of the corporation. Legitimacy theory and 370
stakeholder theory do hold in ICCs’ CSR reporting practice. 371
372
16
373
Fig. 1. CSR performance indicators disclosed by ICCs (2008-2012) 374
375
Construction is a major contributor to environmental degradation, e.g., by generating greenhouse 376
gas emissions, discharged water, and waste. The ICCs reported their CSR policies and 377
technologies, for dealing with these issues. Construction also has a significant impact on the local 378
community and so the ICCs devise their CSR commitment to deal with the nuisances and help 379
the community. Construction is notorious for the hardship of its working environment: many 380
view it as a 3D (dangerous, dirty, and demanding) industry, and OHS incidents are sometimes 381
reported. The ICCs in the sample disclosed CSR strategies to address these issues, which include 382
ensuring that employees have adequate training in the safe use of all plant, machinery, substances, 383
and other OHS issues. EN2 (Energy), SO2 (Code of Conduct/Ethic) and LA2 (Training and 384
Education) also attracted much attention in the CSR disclosures. It can be seen from Fig. 1 that 385
80%–90% of the sample companies reported these indicators in the past five years. Table 5 lists 386
examples of the detailed CSR strategies and performance disclosure on the above frequently 387
reported aspects. For example, Vinci disclosed quantified performance in reducing emissions, 388
effluents and waste. Skanska highlighted it being the world’s largest investment in OHS 389
implemented by a single company. 390
391
392
05
101520253035404550
EN1 MaterialsEN2 Energy
EN3 Water
EN4 Biodiversity
EN5 Emissions, effluents and…
SO1 Community
SO2 Code of Conduct/ ethic
SO3 Anti-Corruption
SO4 Anti-Competitive…
LA1 Diversity and Equal…
LA2 Training and EducationLA3 Occupational Health…LA4 Work- Life balance
LA5 Salary policy/ benefits
LA6 Employee feedback
PR1 Customer Health and…
PR2 Product and Service…
IT1 Media
IT2 Intra-corporate
IT3 Reported to markets
EI1 Economic perfomance
EI2 Market presence
EI3 Indirect economic impacts
2012 2011 2010 2009 2008
17
Table 5 Examples of CSR strategies and performance frequently reported by 393
international construction companies 394
Company CSR strategies and performance
Emissions, effluents and waste (EN5)
Vinci Vinci has been measuring its GHG emissions according to the ISO 14064 standard
across its worldwide scope since 2007. Its greenhouse gas emissions amounted to 62
tons of CO2 per million euros of revenue in 2012, which constitutes a 13% fall from
2009. In the annual Carbon Disclosure Project review, Vinci obtained a score of
80/C, up five points from 2011.
Fluor Fluor established its global carbon footprint baseline in 2006 for its offices, fleets at
those offices and air travel, so that it can effectively manage operations in an
environmentally responsible manner.
Communities (SO1)
Hochtief The company focuses its activities on two main issues: educating and promoting
young talent, and shaping the maintaining living spaces.
Bechtel Partnerships have been formed with five nonprofit organizations (NGOs) to enhance
the company’s positive impact in communities. Bechtel volunteers engage in the
global work of these partners, focusing on the education of children, particularly in
the areas of science, technology, engineering, and mathematics.
Strabag
SE
The Concordia aid organization has been caring for abandoned children in Romania,
Moldova and Bulgaria. The group also cares for older people in need.
OHS (LA3)
Skanska For the eighth consecutive year, a Skanska Safety Week has been organized, which
according to Skanska (2014) is the world’s largest investment in occupational health
and safety implemented by a single company.
GS GS has established formal joint management-worker health and safety committees in
which a certain percentage of the total workforce must be represented.
CCCC CCCC protects establishes a sound labor protection mechanism and systems on
employees’ regular annual physical examination and special examination of special
trades and harmful types of work.
Energy (EN2), Code of Conduct/Ethic (SO2), and Training and Education (LA2)
Saipem Saipem installed 49 solar water heater panels on Saipem Karimun base in Indonesia,
which will help save 97,000kWh energy and reduce CO2 emissions by approximately
20 tons.
Balfour
Beatty
To conduct business with integrity, Balfour Beatty requires its employees to take an
online Code of Conduct training module. The company has introduced an Ethics
Helpline and opened other channels so that employees and others can report behavior
that is or is suspected to be unethical or in breach of the Code of Conduct.
Grupo
ACS
The company has programmes for continuous training and skills development, aimed
at meeting employees’ training needs for correct execution of their work and for
personal and professional development.
395
18
A similar phenomenon that companies disclose more about their strategies that can help remedy 396
the negative impacts they may cause can also be witnessed in other industries. For example, in 397
the beverage industry, Starbucks and Coca-Cola promote fair trade of coffee beans and cocoa 398
beans respectively (Argenti 2004), while the food industry mainly focuses on product 399
responsibility (Cuganesan et al. 2010). The finance industry mainly concentrates on socially 400
responsible investing (SRI) (Hillman and Keim 2001; Renneboog et al. 2008). Although there is 401
perpetual concern that investing in CSR will jeopardize corporate financial performance (CFP) 402
(Lu et al. 2014; Margolis and Walsh 2001; Orlitzky et al. 2003), CSR strategies that are 403
embedded in the companies’ business lines may create a ‘win-win’ CSR/CFP situation. Notably, 404
some of the ICCs highlighted construction as a direct contributor to CSR. CCCC sees its 405
transportation infrastructure business as playing a positive role in promoting regional economic 406
development, providing more employment opportunities, and encouraging the development of 407
relevant materials and equipment supply. 408
409
Nevertheless, this research discovered findings that are against our previous assumption about 410
CSR disclosures - some of the reported CSR strategies, such as providing training for the local 411
community, appear not to be linked to the ICCs’ construction business. Although education is 412
recognized as a universal value, comments from top ICC executives implies that this CSR 413
strategy, similar to philanthropy, is seen as an indirect strategy bringing immediate benefit while 414
causing ‘less trouble’ to the company at a later stage. Moreover, the theoretic perspective that 415
companies tend to disclose more about their commitment to CSR remedial strategies does not 416
hold in the aspects coded SO3 (Anti-Corruption), SO4 (Anti-Competitive Behavior), LA4 417
(Work-life balance), and IT2 (Intra-corporate Information Transparency). For example, although 418
corruption issues have not diminished in recent years, there have been fewer disclosures of 419
corruption issues in ICCs’ CSR reports, suggesting this is a sensitive issue that ICCs do not wish 420
to be publically discussed. This accords with the view of O’Donovan (2002) that CSR disclosures 421
vary according to the intent of the discloser. 422
423
Q2: Do ICCs from more economically developed countries maintain a higher level of CSR 424
disclosure than their counterparts from less developed countries? 425
Based on the basic data in Table 3, CSR disclosure levels were analyzed. Each “√” for a specific 426
indicator in a report was counted as 1 point; the total points for a report in a specific year could 427
then be viewed as the company’s CSR disclosure level, i.e. the extent to which an ICC reported 428
19
their CSR performance. Whereas previous studies (e.g. Cuganesan et al. 2010; Jenkins and 429
Yakovleva 2006) used number of pages as proxies for disclosure levels, appearance of the 430
indicators is believed to be more helpful for probing into CSR disclosure. Since there are 23 431
indicators (see Table 2), the maximum disclosure level a company can possess is 23. Table 6 and 432
Fig. 2 show the total disclosure levels contributed by the ICCs as a whole on a yearly basis, 433
showing both the number of reports and the reporting levels increasing. ICCs as a whole have 434
increasingly enriched the content of their CSR disclosure, evidenced by the increasing average 435
disclosure levels per report and the converging standard deviation. Table 7 shows the annual 436
numbers of reports by region from 2008 to 2012, from which it can be clearly seen that ICCs in 437
European countries pay more attention to the disclosure of CSR activities while Asian companies 438
are catching up in this regard. 439
440
Table 6. ICCs’ CSR disclosure levels on a yearly basis 441
2008 2009 2010 2011 2012
No. of reports 20 25 30 33 47
Potential range of
disclosure levels* [0-460] [0-575] [0-690] [0-759] [0-1081]
Total no. of disclosures 289 344 449 540 722
Average disclosure
level per report 14.45 13.76 14.97 16.36 15.36
Standard deviation 5.40 5.46 4.67 4.11 4.54
* Potential range of disclosure level= No. of reports*23, since the maximum disclosure level for each 442
report is 23. 443
444
20
445
Fig. 2. CSR disclosure levels by ICCs (2008-2012) 446
447
Table 7. The numbers of reports disclosed by ICCs from different countries or regions 448
Years
Countries/ Regions Total Reports
(?/50) Europe a
(21)c
Asia and Australia b
(20) c
U.S.A
(8) c
Brazil
(1) c
2008 9 8 2 1 20
2009 11 12 2 0 25
2010 13 13 3 1 30
2011 14 16 2 1 33
2012 21 18 7 1 47
a. Reports from companies in Spain, France, Germany, Italy, U.K, Sweden, Netherlands, Greece and Austria are 449
included in this column. 450
b. Twenty ICCs from four Asian countries (China, South Korea, Japan and India) and Australia were ranked as top 451
50 by ENR in 2013. 452
c. The numbers in the brackets are the numbers of ICCs from that country/region. 453
454
To further examine the impact of country-specific differences on the extent of CSR reports, the 455
companies have been arranged into four groups according to different regions divided by ENR: 456
(1) Europe; (2) Asia and Australia; (3) the USA; and (4) Latin America (Brazil). Fig. 3 illustrates 457
the annual CSR disclosure levels by the different regions, and Figs. 4, 5, and 6 illustrates the 458
levels at individual company level. European ICCs all have high levels of CSR disclosure, which 459
they have maintained over the past five years. Through this disclosure, they are seemingly more 460
willing to interact with society, making themselves more ‘caring’ companies. ACS and Abeinsa 461
460
575
690759
1081
289344
449
540
722
14.45 13.76
14.97
16.36
15.36
12
12.5
13
13.5
14
14.5
15
15.5
16
16.5
17
0
200
400
600
800
1000
1200
2008 2009 2010 2011 2012
Potential range of disclosure levels Total no. of disclosures
Average disclosure level per report
21
from Spain, and Balfour Beatty from the UK are the three top ICCs which possess highest CSR 462
disclosures levels. Asian and Brazilian ICCs are catching up and increasing their CSR disclosure 463
levels to an extent that is similar to developed world ICCs. Larsen from India, Kajima from Japan, 464
and CREC from China are the three top Asian ICCs having high CSR disclosure levels. With 465
globalization, and in view of the heightening concerns surrounding the international construction 466
business, ICCs from non-Western countries have joined the CSR cause. For example, Chinese 467
ICCs, irrespective of the fact that they are emerging as amongst the strongest contenders in the 468
global construction market (Lu et al. 2009; Low and Jiang 2003), have made significant strides 469
in reporting CSR since 2010. Partly, this is due to pressure from the Chinese government to make 470
their State Owned Enterprises more socially responsible, and partly a recognition that socially 471
responsible investment influences the share price of a business, although the structure of the 472
Chinese capital market poses serious questions for the SRI development in China. Chinese 473
investors have not yet developed an appetite for SRI. The Chinese securities market has been 474
famous for excessive speculation. Indigenous Chinese investors are obsessed with short-term 475
profits, rather than long-term investment (Lin 2010). In the face of the criticism, for example, 476
the US Secretary of State Hillary Clinton warning of a creeping “new colonialism” in Africa 477
(Lee 2011), Chinese ICCs have started to publish CSR reports in English. Strangely, the large 478
group of American ICCs seems to publish CSR reports only on an ad hoc basis. Only Flour and 479
Bechtel disclose their CSR performance regularly (See Fig. 6). 480
481
Fig. 3 CSR disclosure levels per annum by ICCs from different regions (2008-2012) 482
483
0.00
5.00
10.00
15.00
20.00
0
50
100
150
200
250
300
350
400
2008 2009 2010 2011 2012Europe SUM Asia and Australia SUM U.S.A. SUM Brazil SUM
Europe MEAN Asia and Australia MEAN U.S.A. MEAN Brazil MEAN
22
Fig. 4. CSR disclosure levels per annum by European ICCs (2008-2012) 484
485
486
Fig. 5. CSR disclosure levels per annum by all Asian and Australian ICCs (2008-2012) 487
488
489
490
0 20 40 60 80 100 120
CCCCSinohydro
CSCECChina Machinery
CRECCITIC
SamsungHyundaiDaelim
GSSK
Samsung C&TDaewoo E&C
POSCOJGC
ObayashiKajimaLarsen
LeightonLend Lease
Asia and Australia
2008 2009 2010 2011 2012
China
Japan
S. Korea
India
Australia
0 20 40 60 80 100 120
ACS
FCC
OHL
Abeinsa
Tecnicas Reunidas
Isolux Corsan
Acciona
Hochtief
Bilfinger
Strabag
Vinci
Bouygues
Technip
Saipem
Salini
Danieli & C
Skanska
Royal BAM
Consolidated contractors
Balfour Beatty
PetrofacEurope
2008 2009 2010 2011 2012
Spain
Germany
Austria
France
Italy
SwedenNetherlands
Greece
U.K.
23
Fig. 6. CSR disclosure levels per annum by US ICCs (2008–2012) 491
492
Q3: Are there more ICCs reporting their CSR performance in accordance with the GRI 493
reporting guidelines and using third-party assurance to enhance the credibility of the disclosed 494
information? 495
Table 8 shows that ICCs are increasingly reporting their CSR strategies and performance in 496
accordance with the GRI Sustainability Reporting Guidelines. Usually, companies state 497
explicitly their compliance with GRI guidelines in their reports, e.g. “the ACS Group’s Corporate 498
Responsibility Report is prepared according to the GRI’s A+ standard and is verified annually”. 499
The reports published in 2012 largely follow the G3.1 Guidelines. Some companies (e.g. 500
Hochtief AG) have followed the CRESS recently published by the GRI. Standardization of CSR 501
reporting is seen as particularly necessary by the GRI, which aims to develop a reporting system 502
framework to provide metrics and methods for measuring and reporting sustainability-related 503
impacts and performance. The emergence of the guidelines provides a useful tool for ICCs to 504
organize the contents of their CSR reporting. By providing the indicative aspects of CSR 505
reporting, they can even impact the CSR strategies a company may adopt, although currently 506
there is no evidence to support this assumption. While it is observed that ICCs’ CSR disclosures 507
are converging to the GRI and its guidelines, it is found out that companies also frequently 508
reported their own CSR commitment in aspects such as work-life balance, and information 509
transparency, which have not been clearly included in the guidelines. In part, this is because CSR 510
is not specifically embodied in company law, although there is a requirement for disclosure of 511
certain CSR activities, hence ICC disclosure is based on company priorities. There has been 512
debate about the inclusion of CSR in company law as it would help to clarify the purposes of a 513
company: profit-making and social responsibility. However, a different viewpoint is that the 514
inclusion of CSR in company law would endanger the for-profit nature of corporations. 515
0 20 40 60 80 100 120
Bechtel
Flour
PCL
KBR
CB&I
Kiewit
McDermott
Foster…
U.S.A.
2008 2009 2010 2011 2012
24
Table 8. The numbers of total CSR reports, those following the GRI standard, and those 516
using third-party assurance 517
2008 2009 2010 2011 2012
Total No. of reports 20 25 30 33 47
No. of reports in accordance with
the GRI reporting guidelines 14 19 21 24 27
No. of reports using third-party
assurance 6 7 10 12 13
518
Another interesting finding is that the ICCs are increasingly including third-party assurance in 519
their CSR reports to enhance the credibility of the disclosed information. GRI external assurance 520
normally assesses a report in terms of its application levels, and does not provide an opinion on 521
the sustainability performance of the reporter nor the quality of the information in the report. For 522
example, the ACS Group used KPMG to perform a limited assurance review on the non-financial 523
information contained in its CSR reports. While it has been common practice for financial 524
information to be verified through internal and external audits by an independent auditor, 525
verification of CSR information is relatively new in the international construction business. This 526
resonates with Jenkins and Yakovleva’s (2006) finding that there has been a gradual increase in 527
levels of assurance in the mining industry, but even where assurance exists, it usually audits 528
quantifiable environmental and health and safety indicators, while avoiding the more complex 529
qualitative social measures. 530
531
Q4: What are the idiosyncrasies in CSR reporting impacted by cultural and institutional 532
difference? 533
The pattern of performance indicators is further examined by linking it to ICCs’ 534
cultural/institutional profiles. Interesting research findings are discovered. As can be seen from 535
Table 9, Japanese ICCs particularly emphasize the importance of ‘work-life balance’ (LA4) in 536
their CSR disclosure. Obayashi prefers to promote work-life balance by reducing overall work 537
time, acquiring a certification from the Japanese government and promoting the healthy minds 538
and bodies of employees and their families. This is attributable to the profound influence of 539
Confucianism. Lu et al. (2009) reported that Confucianism shaped the foundation of social values, 540
which admire loyalty, obedience, hardworking, modesty, and so on, in not only China but also 541
other East Asian countries. Under this culture background, hardworking is widely accepted as 542
the norm across a swathe of business sectors, particularly in construction. The hardworking 543
25
culture, however, has evolved into a certain stage that ‘work-life balance’ should be upheld. 544
Interestingly, ‘work-life balance’ has not frequently mentioned by Chinese or Korean ICCs (see 545
Table 9). The temptation is to further examine it by connecting it to the construction productivity 546
in different countries. Similarly, within Europe, a Greek registered company will have different 547
values to a Swedish company. ‘Code of conducts/ethics’ (SO2) is most frequently reported by 548
ICCs from Western European countries such as UK, Germany, Spain, and Italy. All the seven 549
Spanish companies, the three Italian companies, and the two UK companies disclosed the ‘Code 550
of conduct/ethics’ in the investigated years. It is generally considered that these countries have a 551
relatively high ethical standard as a guide for the professional practices especially in ethical, 552
social and environmental matters. The standard must not be lessened when they conduct 553
construction business in host countries. A characteristic of ICCs is that they are domiciled and 554
registered in their home country with a regulatory and social framework that must be complied 555
with, they are also working in countries with very different regulatory and social requirements. 556
When they publish CSR reports, their audience is the shareholders, customers, and society in 557
their home domicile, and customers and society in the other countries in which they operate. 558
Contrasting operational standards of the USA with Indonesia are very different, yet cannot be 559
ignored. ‘Market presence’ (EI2), which includes procedures for local hiring for all direct 560
employees from contractors and sub-contractors (CRESS 2014), is also an indicator that is 561
particularly disclosed by EU countries’ ICCs. They are strong in construction ‘know-how’ and 562
do not have a large group of directly hired workers. They also source their construction materials 563
and machinery on a global scale. These provide an opportunity for the ICCs to achieve CSR 564
excellence throughout their global logistics and supply chain. Notably, for unknown reason, the 565
American ICCs are not particularly remarkable in disclosing their commitment in either ‘Code 566
of conduct/ethics’ or ‘Market presence’. 567
568
Table 9. Analyses of unique CSR disclosure by countries/regions 569
Indicator Countries/Re
gions
No. of
Companies a
No. of
Reports a
Disclosure
Levels a Proportion
LA4 Work-life
balance
Japan 3 13 12 92.31%
China 6 18 7 38.89%
S. Korea 8 21 8 38.10%
SO2 Code of
Conduct/Ethics
Europe b 15 49 47 95.92%
U.S.A. 9 20 14 70.00%
EI2 Market
Presence
Europe b 15 49 46 93.88%
U.S.A. 9 20 14 70.00%
26
a. Number of companies, Number of Reports and Disclosure Levels include the data of 5 years from 570 2008 to 2012 inclusive; 571 b. Four countries’ companies (Spain, France, Italy, and UK) are included in the group of “Europe”. 572 573
Other interesting idiosyncrasies in CSR reporting impacted by cultural and institutional 574
difference have been discovered. For example, the oxymoron of CSR might be doubled when it 575
comes to China, as CSR is perceived as volunteering in many cultures while in China assuming 576
CSR is regulated by Article 5 in its Company Law revised in 2005. In the UK, anti-corruption 577
actions are particularly promoted. Balfour Beatty is the corporate supporter of TI, the Institute 578
of Business Ethics and the UK Anti-Corruption Forum by working with all three organizations 579
to help develop and share best practice and promote the objectives. One notable trend is that 580
ICCs would not adopt ‘one-size-fit-all’ CSR strategies; rather, they devise tailor-made CSR 581
strategies to possibly shorten the cultural/institutional distance between home and host countries. 582
Differences in philanthropical activities result mainly from the differences in the regions in which 583
ICCs operate and the prevailing social welfare policies and cultural norms of the regions. Usually, 584
ICCs aim to gear the social commitment toward the needs of the society. For example, Hochtief 585
Asia Pacific is highly involved in working for the rights of Indigenous Australians; its Americas 586
division undertakes a variety of measures to help ethnic minorities and the Europe division 587
supports talented young people from a migrant background. There are other examples that ICCs 588
would have different CSR strategies due to different culture of host countries. Balfour Beatty, 589
for example, is a lead sponsor for the London Youth Games, which works with some of the most 590
disadvantaged young people in London, while in Philadelphia, they have been funding a 591
mathematics programme for children of destitute families to help them keep pace with more 592
fortunate social groups in the race for high school and college places; in South Africa, they give 593
financial and practical support to the Compass Care Centre in Edenvale which provides food and 594
shelter to poor, homeless, and unemployed mothers and their children. CSR, in a sense, has been 595
employed by ICCs as a ‘soft power’ when undertaking their international construction business. 596
ICCs adopt CSR strategies that are mostly desired by host countries in line with their cultural 597
and institutional difference. 598
599
Q5: What are the possible prospects of CSR disclosures by ICCs? 600
Based on the above analyses of the trends of CSR disclosures, it can be reasonably expected that 601
the number of companies disclosing their CSR performance using CSR/SD reports will increase 602
in the future. ICCs from developed countries will continue to maintain a high level of CSR 603
27
disclosure. The average disclosure level of Asian and Australian ICCs shows a dramatic rise in 604
the past years to an extent that is similar to Europe’s ICCs. In line with the trend that ICCs from 605
developing countries increasingly become an emerging force in built environment provision in 606
the international arena, they will also join in this CSR cause, either self-consciously or forcedly 607
by external pressure. This echoes with Porter and Kramer (2006) that CSR has emerged as “an 608
inescapable priority for business leaders in every country”. ICCs view CSR reporting an effective 609
way of interacting with society and influencing external perceptions of their organizations. The 610
idea that all organizations should realize and discharge their social responsibility for sustainable 611
development of society, a concept demonstrated by ISO 26000, has spread around the world. 612
613
Theorists suggested that there is a ‘social contract’ between companies and society, bound by 614
which companies agree to perform various socially desired actions in return for societal approval 615
of their objectives and other rewards. Whilst the ‘social contract’ is gradually accepted as the 616
rationale behind CSR disclosure, ICCs are still struggling with what should be entailed in it. This 617
is further exacerbated by the absence of a single and agreed definition of CSR. Increasingly, 618
ICCs adopt the GRI as the guidelines of their CSR disclosure and this is expected to be the 619
prospect in the future. Although standardization of CSR disclosure is advocated, diversity of 620
CSR disclosure contents will continue and should be allowed. The diversity lies in the cultural 621
and institutional distance between the home and host countries, a particular issue that ICCs must 622
deal with when they undertake the international construction business by using CSR as a ‘soft 623
power’. There are some items that have been frequently disclosed by ICCs but have not been 624
included in CRESS. It would be a reasonable move for the GRI to expand their guideline to 625
include the items in the future. 626
627
Third-party assurance is expected to continue in ICCs’ CSR reporting to enhance the credibility 628
of the disclosed information. Nevertheless, verification of CSR information, which is largely 629
non-financial in nature, will remain as a challenge in CSR reporting in the international 630
construction business. How to quantify and report CSR information consistently to allow society 631
to monitor it longitudinally is a challenge to not only the third-party auditors, but also the ICCs 632
which perceive CSR reporting as an effective way of communication. This was also echoed by 633
McKinsey (2011) that the challenge for CSR reporting is the measurement of tangible outcomes 634
and explaining the integration of external engagement. 635
636
28
Conclusions 637
This research explored the trends and prospects of CSR disclosure in the international 638
construction businesses. Analysis of the CSR/sustainability reports over a period of five years 639
(2008-2012) of the 50 top international construction companies (ICCs) ranked by Engineering 640
News-Record showed that there is increasing CSR disclosure. ICCs are enriching the contents of 641
their CSR disclosure reports, viewing this an effective way of interacting with society and 642
influencing external perceptions of their organizations. ‘Emissions, effluents and waste’, 643
‘Community’, and ‘Occupational health and safety’, are the three most frequently reported CSR 644
indicators. This largely confirmed legitimacy theory and stakeholder theory, which imply that 645
higher levels of CSR disclosure occur concurrently with increased focus on the potential 646
problems a company may cause, or increased threat of litigation or fines. Nevertheless, there 647
have been fewer disclosures in sensitive aspects such as anti-corruption, anti-competitive 648
behavior, and intra-corporate information transparency. These are the aspects that ICCs can 649
perform better and should have more disclosure. 650
651
This research further discovered that ICCs from the more economically developed countries 652
maintain a high level of CSR disclosure, while ICCs from the less economically developed 653
countries are beginning to adopt this practice. Emerging from the both sides of the Atlantic, CSR 654
has travelled to the world with the internationalization of construction business; so have CSR 655
disclosure practices. The research found that ICCs increasingly report their CSR strategies in 656
accordance with the GRI reporting guidelines, although there is no way to identify whether this 657
compliance is effective or not. Increasingly, ICCs are using third-party auditors in their CSR 658
reports to ensure the credibility of the disclosed information. While CSR disclosures by ICCs 659
present a higher degree of uniformity, they also show nuanced and intriguing diversity in their 660
CSR reporting. ICCs from EU highlighted their compliance of code of conducts/ethics, and their 661
‘Market presence’ which means achieve CSR excellence throughout their global logistics and 662
supply chain of construction business resources. East Asian ICCs are promoting work-life 663
balance while inherently they uphold a merit of ‘hard working’ in their value system. 664
665
By providing an international and paradoxical lens through which CSR issues can be investigated, 666
the research contributes to the relevant body of knowledge by helping confirm or refute various 667
theoretical perspectives on CSR disclosure in international construction. The insights offered by 668
this research will allow ICCs to consider the contents that a CSR disclosure report should include. 669
29
For scholars interested in CSR, the approaches used to measure the extent and levels of disclosure 670
are useful references. The limitations to this paper are: firstly, the analysis was based solely on 671
one type of communication – CSR reports published on websites. Some CSR reports could not 672
be found despite our best efforts. Secondly, the longitudinal study’s five-year time frame may 673
not be long enough for the emergence of meaningful trends. Third, the CSR reporting practices 674
of only the top 50 large ICCs might not be representative of the international construction 675
business in general, because smaller international companies have not been included in the study. 676
677
Acknowledgement 678
The work is supported by the Hong Kong Research Grants Council (RGC) General Research 679
Fund (GRF) (Project No.: HKU 749312B). 680
681
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